The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner is the state agency charged with the responsibility of regulating real estate licensees in the State of Florida. At all times material to the allegations of this case, Respondent was licensed as a real estate broker, license number 0333239, doing business at 120 East Oakland Park Boulevard, Suite 105, Fort Lauderdale, Florida, as Vaca Realty. On or about February 12, 1996, Respondent obtained a contract for sale and purchase on a property owned by Daryl Cohen. The purchasers, Donald H. Wilker and Patricia C. Wilker, executed the contract and tendered an initial deposit of $100. Respondent held the listing on the Cohen home and upon receipt of the signed contract, placed the initial deposit as well as a second deposit in the amount of $1,900 into the Vaca Realty operating account. The $2,000 deposit was never placed into a real estate escrow account or other proper depository. The contract between the Wilkers and Cohen was scheduled to close April 1, 1996. Prior to closing, the Wilkers notified Respondent that they were canceling the contract due to the condition of the roof. The parties were unable to agree as to the condition of the roof and the buyers announced their intention to not accept the home with the defects depicted in the roof inspection they had received. On April 2, 1996, Respondent sent a release of deposit form to the Wilkers, which they refused to execute. Such release would have authorized Respondent to release the deposit with $1,000 going to the Seller, Mr. Cohen, and $1,000 going to Vaca Realty. Thereafter, the Respondent was aware that the parties retained legal counsel with regard to the contract dispute. Despite her knowledge of the ongoing disagreement, Respondent did not notify the Florida Real Estate Commission regarding the deposit issue. On or about August 23, 1996, the Seller executed a Release and Cancellation of Contract form that directed Respondent to disburse $1,500 to the Wilkers and $500 to Daryl Cohen. This agreement had been signed by the Wilkers on August 13, 1996. Notwithstanding the terms of the foregoing agreement, on September 18, 1996, Respondent issued two checks from her operating account: one to the Wilkers in the amount of $1,500 and the other to Cohen in the amount of $250. Respondent is currently on a suspension as a result of a Final Order entered in DBPR Case No. 94-82411, which was affirmed by the Fourth District Court of Appeals, Case No. 97-1069, on December 17, 1997, mandate issued January 5, 1998.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a Final Order suspending Respondent's license for six months, require Respondent to complete additional courses in escrow management, and direct that Respondent's escrow account be audited, at Respondent's expense, for at least one year after the reinstatement of her license. DONE AND ENTERED this 30th day of June, 1998, in Tallahassee, Leon County, Florida. J. D. Parrish Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 30th day of June, 1998. COPIES FURNISHED: Henry M. Solares Division Director Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Laura McCarthy, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32801-1772 Lloyd H. Falk, Esquire 600 Southwest 4th Avenue Fort Lauderdale, Florida 33315
The Issue The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalties should be imposed.
Findings Of Fact At all times material to this case, Respondent Tailormade Management, Inc. ("Tailormade"), was a corporation registered as a licensed real estate broker in the State of Florida, license #0259180, located at 12811 Kenwood Lane, #218, Fort Myers, FL 33907. The president of Tailormade was R. C. Hendrickson ("Hendrickson"), an unlicensed person. At all times material to this case, Respondent Comprehensive Management, Inc. ("Comprehensive"), was a corporation registered as a licensed real estate broker in the State of Florida, license #0268646, located at 12811 Kenwood Lane, #218, Fort Myers, FL 33907. Until approximately January 30, 1991, the president of Comprehensive was Hendrickson. On or about January 30, 1991, Hendrickson resigned and relinquished her ownership and control to her son, Jay Coffing, an unlicensed person. The rental escrow account for each company was maintained by Hendrickson and the company bookkeeper. On direction of Hendrickson, the bookkeeper did not disclose information regarding rental escrow accounts to the licensed broker-salespersons. All accounts were reconciled by the bookkeeper who would provide the reconciliation data to the broker. The licensed broker- salespersons did not actually reconcile any accounts, but relied on the bookkeeper's data. At all times material to this case, Linda Futch ("Futch") was a licensed real estate broker in the State of Florida, license #0334770. The most recent license issued to Futch was as a broker-salesperson for Rawlings Realty, Inc., 1642 Colonial Boulevard, Fort Myers, FL 33907-1150. From approximately February 20, 1989 through approximately November 16, 1989, Futch was licensed and operating as qualifying broker and officer for Tailormade. On October 10, 1989, Hendrickson issued check #RE-1895 in the amount of $10,000 from the Tailormade rental escrow account to the Tailormade operating account. A check notation indicated that the funds were "advance management fees". Hendrickson admitted to the company bookkeeper that the funds were to be used to pay the outstanding balance owed to the previous co-owner of Tailormade, from whom Hendrickson had purchased the business. At no time during the period Futch acted as qualifying broker and officer for Tailormade did Futch prepare or sign written monthly escrow account statement reconciliations. Futch did not balance escrow liabilities with the escrow assets. Futch failed to make appropriate entries in monthly reconciliation statements which would note whether a shortage existed and whether corrective action had been taken. Futch maintained no records and was unable to provide any account documentation to the Petitioner's investigator. Futch resigned as Tailormade broker-salesperson effective November 16, 1989. Futch was apparently succeeded by Bette K. Potts. In November of 1990, Jeffrey C. Cooner met with a representative of Tailormade and leased a condominium unit, providing a deposit totaling $1,125 of which $350 was a pet and security deposit. Cooner eventually vacated the unit, 2/ and attempted to obtain a refund of the security deposit. By such time, the Tailormade office was vacant and closed. Cooner has received neither an accounting nor a refund of all or part of the security deposit paid to Tailormade. According to the bookkeeper, as of December, 1990, approximately $35,000 of rental escrow funds had been removed from the Tailormade rental escrow account by Hendrickson and had not been replaced. At all times material to this case, Janet Lynn Coffing ("Coffing"), Jay Coffing's wife, was a licensed real estate broker in the State of Florida, license #0268647. Coffing's most recent license was as a broker in limbo, listing her home address as 5410 Ashton Circle, Fort Myers, Florida, 33907-7828. From approximately February 21, 1991 through approximately May 28, 1991, Coffing was licensed and operating as qualifying broker and officer for Tailormade. From approximately February 14, 1991 through approximately June 14, 1991, Coffing was licensed and operating as qualifying broker and officer for Comprehensive. Coffing was aware, almost immediately after taking over as qualifying broker and officer for the companies that the escrow funds were short. She spoke to Hendrickson (her mother-in-law) and Jay Coffing about the situation, but apparently received no assistance from them. Coffing utilized operating funds to cover escrow shortages when escrow refunds were necessary, and continued to do so until all funds were depleted. On March 18, 1991, Charles W. Pease met with a representative of Comprehensive and leased a condominium unit at 13040 Tall Pine Circle in Fort Myers, Florida, providing two checks totaling $1,650 of which $500 was a security deposit. Upon vacating the unit, 3/ Pease attempted to obtain a refund of the security deposit but the Comprehensive office was vacant and closed. Pease has received neither an accounting nor a refund of all or part of the security deposit paid to Comprehensive. At some time in 1991, 4/ Debra and Kevin Campbell met with Coffing and leased a condominium unit located at 5418 Harbor Castle Drive. At the time the lease agreement was signed, the Campbells paid a $500 security deposit to Tailormade through Coffing. Upon vacating the unit, the Campbells attempted to obtain a refund of the security deposit but were unable to locate Coffing, and the Tailormade office was vacant and closed. The Campbells have received neither an accounting nor a refund of all or part of the security deposit paid to Tailormade. At no time during the period Coffing acted as qualifying broker and officer for either Tailormade or Comprehensive, did Coffing prepare or sign written monthly escrow account statement reconciliations. Coffing did not balance escrow liabilities with the escrow assets. Coffing failed to make appropriate entries in monthly reconciliation statements which would note whether a shortage existed and whether corrective action had been taken. Coffing maintained no records and was unable to provide account documentation to the Petitioner's investigator. On several occasions beginning on July 2, 1991, an investigator from the Department of Professional Regulation visited office location identified as the registered offices of the Respondent Tailormade and Comprehensive companies. The offices were vacant and closed. The investigator contacted Hendrickson and Jay Coffing, and attempted to obtain information from them, but was unable to maintain contact with them. The companies are apparently not operational.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Linda Futch guilty of the violations set forth herein and providing for a fine of $1,000, and a suspension of 90 days, to be followed by a probationary period of two years. During the probationary period, Futch shall complete 60 hours of continuing education, including a 30 hour management course for real estate brokers, and shall provide to the Florida Division of Real Estate all written monthly escrow account reconciliation statements for which she is responsible. That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Janet Lynn Coffing guilty of the violations set forth herein and providing for a fine of $1,000, and a suspension of 180 days to be followed by a probationary period of three years. During the probationary period Coffing shall complete 60 hours of continuing education, including a 30 hour management course for real estate brokers, and shall provide to the Florida Division of Real Estate all written monthly escrow account reconciliation statements for which she is responsible. That the Department of Professional Regulation, Division of Real Estate enter a Final Order revoking the licensure of Respondents Tailormade Management, Inc., and Comprehensive Management, Inc. DONE and ENTERED this 15th day of July, 1992, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1992.
The Issue An Administrative Complaint dated June 20, 1997, alleges that the Respondents, Dessie B. Castell and A. Plus Service Network Realty, Inc., violated certain provisions of Chapter 475, Florida Statutes, and Rule 61J2-10.032(1), Florida Administrative Code, by failing to notify the Florida Real Estate Commission within 15 business days of a good faith doubt as to appropriate disbursement of trust funds in an escrow account, and by failing to maintain those trust funds until disbursement was properly authorized. The issues for determination are whether those violations occurred and, if so, what discipline should be imposed upon the licensees.
Findings Of Fact Respondent Dessie B. Castell is, and was at all material times, a licensed real estate broker in Florida, having been issued license number 0342283 in accordance with Chapter 475, Florida Statutes. Ms. Castell is owner, president and qualifying broker of A. Plus Service Network Realty, Inc., which corporation is registered and licensed in accordance with Chapter 475, Florida Statutes, at 901 Mock Avenue, Orlando, Florida. Ms. Castell negotiated a contract for sale and purchase of a home at 638 18th Street in Orlando, Florida. Rosemary Jackson was the proposed buyer and Valerie Crane, trustee, was the seller. At the time of the contract dated June 26, 1996, Ms. Castell had already been working with Rosemary Jackson and held a $500.00 escrow deposit from Ms. Jackson in her broker’s escrow account. Also, at the time of the contract on June 26, 1996, Ms. Jackson had been pre-qualified for an FHA loan through ESD Lending Corporation, Inc. The contract for sale and purchase between Ms. Jackson and Ms. Crane established July 2, 1996, as the closing date. Ms. Jackson liked the house and needed to move in quickly. The contract failed to close on July 2, 1996. Both Ms. Jackson and Ms. Castell understood that the ESD lending Corporation did not have an approved appraisal required by FHA for the loan. There was an appraisal done on the property for a previous prospective buyer and Ms. Crane furnished that appraisal to ESD before July 2, 1996. Ms. Crane’s own testimony was confused and conflicting as to whether the appraisal she furnished was approved. Ms. Jackson’s and Ms Castell’s testimony was clear and credible that they were never informed that the appraisal was approved, and Ms. Castell did not receive the HUD settlement papers required for closing. Soon after July 2, 1996, someone came to Ms. Jackson’s workplace identifying himself as a representative of Ms. Crane and offering to extend the closing and to provide a refrigerator and some other items. Ms. Jackson was suspicious of this person as she felt that he was trying to circumvent the mortgage company staff with whom she had been dealing. Ms. Jackson had looked at another house earlier that she did not like as well as the house offered by Ms. Crane; but since she needed to move quickly, Ms. Jackson told Ms. Castell to transfer her escrow deposit to a contract on this prior house. Ms. Castell did that on July 5, 1996, and that contract closed shortly thereafter. On July 6, 1996, Ms. Crane faxed to Ms. Castell a letter offering to add the refrigerator and to extend closing to the next Friday. The letter asked that the offer be accepted by 5:00 p.m. on that same day, the 6th or if not accepted, that the $500.00 deposit be released to Ms. Crane. When she received no response, Ms. Crane sent another letter to Ms. Castell on July 13, 1996, demanding the $500.00 escrow deposit, reiterating that Ms. Jackson forfeited her deposit when she did not close on the property after qualifying for the loan and reminding Ms. Castell of her obligation as escrow agent pursuant to Section 475.25, Florida Statutes, in the event of a dispute over the deposit. Ms. Crane sent a copy of her letter to the Florida Real Estate Commission. Ms. Castell and her company did not notify the Florida Real Estate Commission regarding a dispute over the $500.00 escrow deposit. She felt that it was Ms. Crane’s failure to provide an approved appraisal that caused the contract to expire on July 2, 1996, and thereafter, that she and the buyer were entitled to transfer the funds to another contract.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED: That the Department of Business and Professional Regulation enter a final order dismissing the administrative complaint in this case. RECOMMENDED this 16th day of February, 1998, in Tallahassee, Leon County, Florida. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 16th day of February, 1998. COPIES FURNISHED: Laura McCarthy, Esquire Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Dean F. Mosley, Esquire McCrary & Mosley Suite 211 47 East Robinson Street Orlando, Florida 32801 Henry M. Solares, Division Director Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether Respondent committed the offenses set forth in the Notice to Show Cause and, if so, what action should be taken.
Findings Of Fact Petitioner is the state agency charged with regulating yacht and ship brokers and salespersons pursuant to Chapter 326, Florida Statutes. At all times material hereto, Respondent was a licensed yacht and ship broker salesman. He has been licensed since 1990. In December 1990, Respondent was issued license number 1322, as a yacht and ship broker salesman for Seafarer Brokerage, Inc. (Seafarer). In October 1998, he renewed his license, which had an expiration date of October 28, 2000. On July 31, 1997, Lorraine Woods, the President of Seafarer, wrote to Peter Butler, section head of the yacht and ship section of the Department of Business and Professional Regulation, notifying him that Respondent was the broker of record for Seafarer. Ms. Woods' license had been suspended, and Respondent knew that her license had been suspended prior to his becoming broker of record for Seafarer. As the broker of record, Respondent knew that he was solely responsible for safeguarding the money of all clients in the brokerage's escrow account. Respondent did not know the details involving the suspension of Ms. Woods' license. He was not aware that Ms. Woods had abused the control of Seafarer's escrow account for her own benefit by taking client funds from the escrow account to pay for Seafarer's operating expenses. Mr. Butler was very concerned with the abuse of Seafarer's escrow account committed by Ms. Woods. He demanded assurance from Respondent that Ms. Woods would not have access to the escrow account, and Respondent provided that assurance. On August 4, 1997, Respondent wrote to Mr. Butler confirming that he (Respondent) was the broker of record for Seafarer. In his written communication, Respondent confirmed certain details of the escrow account of Seafarer, including that he was broker of record and that the account was located at First Union National Bank of Florida, with the address and account number listed. Moreover, Respondent indicated that, as of July 30, 1997, he became the sole signatory on the account. Respondent personally provided the signatory card, showing that he was the sole signatory on the account, to the bank. Even though the bank did not have a record of such a signatory card, the undersigned is persuaded that Respondent's testimony is credible and that he provided the signatory card to the bank. Even though Respondent was the broker of record for Seafarer, Respondent looked upon Ms. Woods as the employer and himself as the employee, resulting in an employer-employee relationship. Seafarer consisted of two persons, Respondent and Ms. Woods. If Respondent was unavailable for a situation in which a check had to be written and executed, he would prepare a blank check with his signature on it and give it to Ms. Woods. She continued to maintain the business records. Ms. Woods maintained all the operating and escrow records, checks, and bank statements in a locked drawer for which she had the only key; Respondent did not have free and unobstructed access to these documents even though he was Seafarer's broker of record. Respondent and Ms. Woods continued this procedure for over a year without incident. On April 2, 1999, Warren Scott made an offer on a 1974 CAL2-46, a 46-foot yacht, with Seafarer. He placed a $6,000.00 deposit on the yacht. Mr. Scott's dealings, regarding the yacht, were with Ms. Woods. He had dealt with Seafarer and Ms. Woods on a prior occasion, had made a deposit, and had his deposit refunded. As a result, Mr. Scott felt comfortable dealing with Seafarer and Ms. Woods even though he had not purchased a yacht from Seafarer. On April 5, 1999, Mr. Scott's check was deposited in Seafarer's escrow account. On April 5, 1999, check numbered 1144, made payable to cash for $4,305.00, bearing Respondent's signature was written. The check bore the notation at the bottom left corner at the "FOR" space: "CAL2-46 (illegible) Enterprises." This check cleared Seafarer's escrow account on April 7, 1999, leaving a balance of $2,512.34. Respondent had signed the check and left it for Ms. Woods to fill-in the details. The check was signed by Respondent in March 1999 for a closing that was taking place at the end of March, but the check was not used at the closing in March. Ms. Woods had written the check to pay the rent for Seafarer. Even though Respondent had signed the check, the undersigned is persuaded that he did not know that Ms. Woods was going to use the check for a purpose other than for what it was written. On April 27, 1999, Respondent signed a check for $100.00, payable to Complete Yacht Service for engine repair to the CAL2-46. This check cleared Seafarer's escrow account on April 30, 1999, leaving a balance of $5,796.36. After a sea trial and survey, Mr. Scott wrote to Ms. Woods on April 30, 1999, indicating that he had decided not to purchase the 1974 CAL2-46 pursuant to their arrangement of April 2, 1999. On May 3, 1999, Mr. Scott again wrote to Ms. Woods that his offer to purchase the 1974 CAL2-46 for $55,000.00 in the conditional acceptance of vessel agreement, dated April 29, 1999, was expiring on May 3, 1999, at 9:00 p.m. Mr. Scott went to Seafarer on May 4, 1999, to obtain a refund of his deposit from Ms. Woods. Respondent informed him that Ms. Woods was out and that they would have to wait for her return, which was going to be in about an hour. Mr. Scott was unable to wait. He left Fort Lauderdale, returning to Nevada, with the understanding that his deposit, less $100.00 for the engine survey, would be returned to him. Mr. Scott expected the monies within a week to ten days. On May 5, 1999, a deposit of $4,700.00 was made to Seafarer's escrow account, leaving a balance of $9,136.36. On May 5, 1999, Seafarer's escrow account contained sufficient monies to give Mr. Scott a full refund of his deposit, less the $100.00. Respondent left for a vacation to the United Kingdom on May 17, 1999, with his return on June 15, 1999. Prior to his leaving, Respondent signed two blank checks, numbered 1153 and 1154, from Seafarer's escrow account. The checks were written for an upcoming business transaction during his absence, regarding a closing and Respondent's commission on the closing. On May 18, 1999, Seafarer's escrow account balance fell to $5,192.21, after three checks cleared the account. Two of the three checks, signed by Respondent, were payable to Seafarer in the amount of $1,360.00 for "comm.-37'Irwin." During May 1999, checks totaling $6,900.00, which were signed by Respondent, cleared Seafarer's escrow account. Mr. Scott made several telephone calls to Seafarer regarding the return of his deposit. Each time Mr. Scott spoke with Ms. Woods and he was not provided with a satisfactory response from her. On June 16, 1999, Mr. Scott received a check, check numbered 1153, for $5,900.00 from Seafarer. He also received a telephone call that same day from Ms. Woods requesting him not to deposit the check until the end of the month; Mr. Scott agreed. Respondent was not aware that check numbered 1153 was going to be used to refund Mr. Scott's deposit. Respondent was unaware that the check was used for a purpose other than for what it was intended. On June 17, 1999, check numbered 1154, made payable to Seafarer for $1,000.00 for "petty cash" cleared Seafarer's escrow account. The check was used by Ms. Woods to pay Seafarer's telephone and utility bills. Respondent was unaware that check numbered 1154 was going to be used for a purpose other than for what it was written. When Respondent returned from his vacation, he was contacted by Mr. Scott who advised Respondent of the problem with the return of his refund. Respondent checked the bank statements for Seafarer's escrow account and discovered that Ms. Woods had not used the checks for their intended purpose and that she had used funds from the escrow account for improper purposes. On June 25, 1999, Mr. Scott deposited the check that he received from Seafarer. The check, payable to Mr. Scott, was posted to Seafarer's escrow account on June 29, 1999, leaving a negative balance of $2,667.22. For 67 days, between April 5, 1999, when Mr. Scott's deposit of $6,000.00 was deposited in Seafarer's escrow account, and June 29, 1999, the date Mr. Scott's refund of $5,900.00 cleared, Seafarer's escrow account did not have sufficient funds to pay the refund. The period between May 5, 1999, and May 17, 1999, was the only time period, during the 67-day period, that Seafarer's escrow account had sufficient funds to pay the refund. Mr. Scott indicates that his refund was received in his account in July 1999. Respondent remained with Seafarer long enough to ensure that Mr. Scott received his refund. On July 8, 1999, Respondent notified Mr. Butler that he was no longer the broker for Seafarer. Respondent has no prior disciplinary action.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Florida Land Sales, Condominiums, and Mobile Homes, enter a final order: Sustaining the Notice to Show Cause and finding that John Scales violated Subsections 326.002(1) and 326.005(1), Florida Statutes (1997). Suspending Respondent's license for three years. Imposing a civil penalty of $5,000.00. DONE AND ENTERED this 14th day of February, 2001, in Tallahassee, Leon County, Florida. ERROL H. POWELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 2001. COPIES FURNISHED: Janis Sue Richardson, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-2202 Tracy J. Sumner, Esquire 1307 Leewood Drive Tallahassee, Florida 32312 Ross Fleetwood, Director Division of Florida Land Sales, Condominiums, and Mobile Homes Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Barbara D. Auger, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue for consideration in this case is whether the Respondents' licenses as real estate broker and brokerage corporation, respectively, should be disciplined because of the matters set out in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issues herein, the Florida Real Estate Commission was the state agency responsible for the licensing and regulation of real estate salespersons, brokers, and brokerage operations in Florida. The Respondents, Arthur B. Karns and Karns Real Estate Inc., were a licensed real estate broker and brokerage corporation, respectively. Sharon Thayer has been an investigator with the Florida Department of Professional Regulation's Division of Real Estate for over 3 1/2 years. As a part of her duties, she is required to conduct random, no-notice inspections of real estate brokerage offices in Florida. As a part of these inspections, she conducts audits of the broker's escrow account and over time has conducted approximately 1,000 audits. In her audits, she follows a standard audit procedure to reconcile the trust liability of the broker with the escrow account bank balance. In early September, 1991, Ms. Thayer conducted an escrow audit and office inspection of the Respondent's company. During her initial visits, on September 3 and 5, 1991, she requested he furnish her with the office records pertinent to his trust escrow account. Respondent promptly provided most of the records excepting only the account reconciliation forms required by the Commission. When Respondent provided Ms. Thayer with the records, including what he felt were the reconciliations, she reviewed them and then discussed them with him, indicating wherein they were deficient and what, in addition, she would need. In her initial report, completed on the conclusion of the initial visit, she indicated there was an overage of $3,452.75 in the Respondent's escrow account. This figure was in error. She also noted that Respondent was not accounting for his trust liability and indicated he had 5 days in which to take corrective action and provide documentation of the action taken. When she returned for a follow-up visit on September 20, 1991, Ms. Thayer noted that the original note of overage had been in error and that the account now balanced. To achieve balance, however, she referred to the original $500.00 in seed money Respondent had used to open the escrow account. This covered errors in the account as of December, 1990 and service charges. Without this, she noted, the account would have been short by $446.45. Ms. Thayer determined that the Respondent had opened his escrow account with $500.00 of his own funds as seed money. She contend this was improper as the Department allows only $200.00 of seed money which is to be reported each month on the account reconciliation. The $200.00 "limit" is relatively recent. At the time in issue, she claims, the "limit" was set, by unwritten, unpublished Department policy, at $100.00. The only evidence of the existence of such a policy is an article in the Fall, 1991 FREC newsletter, written by Howard M. Gunter, Jr., then Chairman, which notes: There is an unwritten rule that currently allows a broker to keep a minimum amount in his escrow account to cover bank charges, .... The April, 1992 edition of the Central Palm Beach County Association of Realtors' Realtor Review advises of new FREC rules, one of which allows a broker to maintain up to $200.00 of his own or the company's funds in the escrow account to keep it open or to pay for bank monthly service charges. Ms. Thayer's investigation also appeared to indicate that in January, 1991, Respondent disbursed an $850.00 security deposit to lessors of a rented unit when the actual deposit collected was only $500.00. This was also determined to be in error. The evidence demonstrates that on January 3, 1991, Respondent drew check number 1040 on his escrow account to open an escrow account for the Alexandre to Livingston rental. The deposit of $1,700.00 in that case included an $850.00 security deposit. This money was not disbursed to the client, however, as it was placed in an escrow account for that lease. In any case, the security deposit should have been only $500.00 as that was all that had been collected by the prior agent and transferred to the Respondent. When the deposit was made here, Respondent, whose practice was to collect the first and last month rent in advance, along with a security deposit of one month rent, mistakenly assumed the prior agent had done the same. When he learned of his mistake, by letter dated September 13, 1991, he notified the Alexandre's of the mistake and noted the excess $350.00 would be paid back to Karns Real Estate, Inc. Therefore, the extra $350.00 in the trust account had been placed there by Respondent from his own funds, not from any client funds and was due back. Since the $96.45 in bank charges were also accounted for previously and deducted, there was in actuality no shortage. Ms. Thayer also discovered that with regard to two contracts for the sale of real property, both dated in early May, 1991, between E. Buwalda as seller and Ronald Cecere as buyer on one, and Cecelia Barraclough as seller and Jeanne Cecere as buyer on the other, $100.00 in cash was accepted as a partial down payment on each, with each contract calling for an additional deposit of $2,900.00. A special clause in each contract provided: The purchaser will post a Certificate(s) of Deposit with a face amount of at least $3,000.00 with Karns Real Estate, Inc. to be held in escrow as and for the $2,900.00 additional deposit. The Certificate(s) of Deposit can be returned to the Purchaser if and when the Purchaser posts $2,900.00 in cleared funds to cover the additional deposit. In fulfillment of that clause requirement, the Ceceres deposited with the Respondent CD Numbers 020002358756 and 020002359408, from Nova Savings Bank, each in the amount of $2,000.00, the former dated October 24, 1990 and the latter dated December 3, 1990, both showing Jeanne A. Cecere as trustee for Patrick J. and Ronald P. Cecere. The certificates also reflected they were "Not Transferable except on the books of Nova Savings Bank." By his own admission, at no time did Respondent notify either of the sellers that the certificates he held on their behalf as additional deposit were not transferable outside the Nova Savings Bank. At the same time he received the certificates as deposit on the Barraclough property, Respondent also received an additional $1,000.00 in cash to constitute the balance of the $3,000.00 deposit called for in the contract. Aside from a letter from the Ceceres' chastising the Department for its action against Respondent and expressing outrage that the agency should have a negative opinion as to the propriety and legality of the Respondent's activities, there is no independent evidence of any additional deposit placed with regard to the Buwalda contract. In any event, when the matter was noted by Ms. Thayer, the Ceceres, by checks dated September 5, 1991 in the amounts of $1,900.00 each, made payable to Karns Realty, Inc., replaced the two certificates. When Ms. Thayer discussed this matter with Mr. Karns, he seemed surprised at her concern. He indicated he felt accepting the certificates was the same as taking jewelry as security. However, he promised to get replacement security and, as was seen, did so immediately. Ms. Thayer was also concerned about the Respondent's apparent inability to properly reconcile his escrow account with the related bank balance. Her audit revealed he was using a lengthy, self-developed form to balance the checking account statement but this is not enough. There is no requirement that any particular form be used, but the Commission had developed a sample form which contains all the information required in a proper reconciliation and Department rules set out those requirements. On May 13, 1991, the Department of Professional Regulation, in a letter to all real estate brokers, indicated the concern of the Commission that brokers be aware of and comply with their responsibilities regarding monthly escrow account reconciliation. The letter cited the provisions of Commission Rule 21V-14.012 which, while noting there is no official form to be used, reminds brokers the reconciliation must contain certain required information. The sample form, referenced above, requires a bank reconciliation and, in addition, a trust liability reconciliation. Ms. Thayer concluded Respondent had, indeed, completed a full bank reconciliation, but had not completed the additionally required trust liability reconciliation and merged the two. Notwithstanding Respondent's continuing protestations that he had done a complete reconciliation, the evidence indicates rather that he has not. As Respondent's own exhibit, an extract from the 1991 Gaines & Coleman continuing education book points out at paragraph 23 on page 7, the provisions of the rule on escrow reconciliation "is much more than a mere balancing of checkbook accounts." The evidence demonstrates Respondent did no more than that and his reconciliations were not adequate. Mr. Geil, who assisted Ms. Thayer in the audit, has reviewed between 100 and 150 offices in addition to Respondent's office. Of all of these, he would rate Respondent among the 5 or 6 brokers who did the most detailed reconciliations, but he cannot say, from what he saw of Respondent's records, whether Respondent was making a bona fide effort to do an accurate reconciliation. It is clear, however, that, as Respondent repeatedly asserted at hearing, everyone makes mistakes, and Respondent's delicts, established by the evidence, do not show any fraudulent or criminal intent. As Ms. Thayer noted, she found no evidence of fraud, theft or an abuse of trust money for Respondent's own purposes, and the Commission has received no complaints about him from any of his clients.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that a Final Order be entered in this case by the Florida Real Estate Commission dismissing Counts I through VI of the Administrative Complaint, but placing the licenses of Respondents, Arthur B. Karns and Karns Real Estate, Inc. on probation for a period of one year under such terms and conditions, specifically including post licensure education, as the Commission may require, and imposing a reprimand on the Respondent, Arthur B. Karns. RECOMMENDED this 21 day of August, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23 day of August, 1992. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-1266 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: - 4. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated except for the word shortage which should be prefaced by the work "apparent." Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. First three sentences accepted. Balance is a comment on the evidence. FOR THE RESPONDENT: & 2. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and resolved in favor of Respondent. Accepted and resolved in favor of Respondent. 6A -C. Accepted and discussed within the body of the Order. 6D. Not a Finding of Fact but a discussion of the evidence. 6E & F. Not relevant. 7A - C. Not a Finding of fact but a statement of evidence presented. COPIES FURNISHED: James H. Gillis, Esquire DPR - Division of Real Estate Hurston Building, N-308 400 West Robinson Street Orlando, Florida 32801-1772 Arthur B. Karns,. pro se Karns Real Estate, Inc. 6346-63 West Lantana Road Lake Worth, Florida 3343 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900
The Issue The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalty should be imposed.
Findings Of Fact R. Granger Bruner is and at all material times has been licensed as a real estate broker, Florida license number 0010871. CASE NO. 90-2462 On or about September 9, 1989, Mr. Bruner obtained a contract from Alabama resident Earl W. Reed in which Mr. Reed offered to purchase certain property from owner Gary Salter. 1/ Mr. Reed, by his check, deposited with Mr. Bruner the sum of $1,000, as an earnest money deposit in connection with Mr. Reed's offer to purchase Mr. Salter's property. Mr. Bruner erroneously deposited Mr. Reed's earnest money deposit check into the Granger Bruner Realty operating account at People's National Bank of Niceville. Mr. Bruner's escrow account, where the earnest money deposit should have been held, was at the local Barnett Bank in the name of Granger Bruner Realty Trust Account. On or about September 14, 1989, the listing agent for Mr. Salter contacted Mr. Bruner's office and informed Mr. Bruner that Mr. Salter had withdrawn the property from the market. By letter dated September 21, 1989, Mr. Bruner notified Mr. Reed that the property had been withdrawn from the market and that the earnest money deposit was being returned. Enclosed with the letter was People's National Bank of Niceville check #509 drawn on the operating account of Granger Bruner Realty in the amount of $1,000 payable to Earl Reed. The letter and check were mailed to Mr. Reed at his address in Alabama. Mr. Reed apparently did not receive the letter or check, and became concerned about the return of his deposit money. The administrative complaint alleges that Mr. Reed continued to demand return of the deposit. Although the Department introduced a copy of Mr. Reed's complaint, Mr. Reed did not testify. The evidence does not establish that Mr. Reed made repeated demands on Mr. Bruner for return of the deposit. The complaint further alleges, but the evidence does not establish, that the September 21, 1989 check was not mailed until September 28, 1989. On September 30, 1989, Mr. Reed met in Crestview with Mr. Bruner and demanded the return of his earnest money deposit. Mr. Bruner issued check #2924 in the amount of $1,000 from Mr. Bruner's wife's personal account payable to Earl Reed. Mr. Bruner subsequently had a stop-payment order issued against the first check to Mr. Reed. CASE NO. 90-2463 Prior to October 6, 1989, Elaine Brantley, an auditor/investigator for the Department contacted Mr. Bruner and made an appointment to perform a routine audit on Mr. Bruner's accounts. Prior to October 6, 1989, Mr. Bruner was aware that his escrow account was short. On that date, Mr. Bruner deposited approximately $1,400 into his escrow account to cover the shortage. The deposit resulted in an overage in the account. Upon Ms. Brantley's arrival, Mr. Bruner informed her that the escrow account was short, that he'd gotten behind in bookkeeping, and that his secretary was depositing additional funds into the escrow account. Ms. Brantley had Mr. Bruner telephone the bookkeeping department at Barnett Bank. With Mr. Bruner's approval, Ms. Brantley asked for and obtained the balance of the escrow account by telephone from a bank employee. 2/ Mr. Bruner then informed Ms. Brantley that escrow account liabilities totaled $1,727.38. Ms. Brantley reviewed the account's check ledger and determined that the escrow account was indeed short. During the audit, Ms. Brantley noted an escrow account check #453 dated 7/25/89 in the amount of $500 made payable to Mr. Bruner. Ms. Brantley stated that Mr. Bruner said that he had disbursed the funds to himself to cover a mortgage payment he made to a third party identified as Ms. Penner. At hearing, Mr. Bruner testified that he had used his escrow account to cash a $400 check for another person, and that check #453 was drafted to recover his personal funds from the account. He stated that the check was written in error and that the transaction was not handled correctly. He admitted that he did not know the balance of the escrow account at the time the check was written. The recorded checkbook balance at the time was $340.19. At the time of the audit, Ms. Brantley also noted check #487 dated 9/26/89 in the amount of $500 to Ms. Penner. The evidence establishes that check #487 was Mr. Bruner's personal mortgage payment to Ms. Penner.
Recommendation Based upon the foregoing Findings of fact and Conclusions of Law, it is RECOMMENDED: That the Department of Professional Regulation, Division of Real Estate, enter a Final Order suspending the licensure of R. Granger Bruner for a period of 90 days, and imposing a total fine of $2,000, including $1,000 pursuant to Rule 2IV-24.001(3)(1), Florida Administrative Code, and $1,000 pursuant to Rule 21V-24.001(3)(c) and (f), Florida Administrative Code. It is further recommended that R. Granger Bruner be required to successfully complete a course of education related to management of operating and escrow trust accounts and be required to file escrow account status reports with the Commission at such intervals as the Commission deems appropriate. DONE and ENTERED this 17th day of April, 1991, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of April, 1991. APPENDIX TO RECOMMENDED ORDER CASE NO. 90-2462 The Petitioner did not file a proposed recommended order. The Respondent filed a "Proposed Order" which sets forth proposed findings of fact. The proposed findings are accepted as modified in the Recommended Order except as follows: "Proposed Order" Accepted as to failure to prove exact amount of escrow account shortage. Rejected as to whether a shortage existed, contrary to evidence. Rejected. The testimony at hearing that certain deposits were not received is contrary to information provided to auditor and was not credited. Although the testimony related to the escrow account balance was unsupported hearsay, the auditor's testimony related to deposits and liabilities was based upon admissions by the Respondent. See Section 90.803(18), Florida Statutes. Rejected, conclusion of law. Rejected, not supported by weight of evidence. 8-9. Rejected, unnecessary. 10. Rejected, immaterial. 11-12. Rejected, unnecessary. "Finding of Fact" The Respondent also filed a separate statement entitled "Finding of Fact" which includes additional proposed findings of fact. The proposed findings are accepted as modified in the Recommended Order. COPIES FURNISHED: James H. Gillis, Esquire Senior Attorney Department of Professional Regulation Division of Real Estate Hurston North Tower 400 W. Robinson Street P.O. Box 1900 Orlando, Florida 32802-1900 Bart O. Moore, Esquire Moore, Kessler & Moore 102 Bayshore Drive Niceville, Florida 32578 Darlene F. Keller, Director Division of Real Estate Department of Professional Regulation Division of Real Estate Hurston North Tower 400 W. Robinson Street P.O. Box 1900 Orlando, Florida 32802 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact On July 13, 1973 Respondent, Abelardo Blanco, negotiated a contract between South Kendall Ranch, Inc., the purchaser, and Luis Hernandez, the seller, of a tract of land in Polk County, Florida. As earnest money deposit the purchaser gave a $500 check payable to Global Realty Escrow Account and an additional $4,500 deposit when the contract was accepted by the seller. The three checks in the amount of $500, $2,000, and $2,500 were all dated July 13, 1973 and made payable to Global Realty Escrow Account. These three checks were endorsed by Blanco and deposited in Global Realty Escrow Account at Republic National Bank of Miami on July 16, 1973. By checks payable to Blanco dated July 14 in the amount of $1,000, dated July 20, 1973 in the amount of $2,100, and dated July 20, 1973 in the amount of $900, signed by Blanco, $4,000 was withdrawn from this escrow account. By check payable to Robert Jewell dated July 21, 1973, and signed by Blanco, $1,000 was withdrawn from this escrow account. No authorization to disburse these funds was ever given to Blanco by the purchaser. Due to failure of the seller to present an abstract of title of the property to the attorney for the buyer the contract was rescinded and the transaction never closed. The buyer demanded return of his earnest money deposit from Blanco and after receiving no response to several demands filed a complaint with FREC. Blanco acknowledged to the buyer that he had taken the earnest money deposit from the escrow account; and, on April 10, 1974 Blanco executed a promissory note for $5,000 payable to the buyer. Subsequently he paid $2,400 on that note before departing his last known address for parts unknown. When questioned by the investigator for FREC in October, 1974 Blanco blamed a non-active firm member of taking the escrow deposit and leaving the country; however, the checks introduced into evidence indicate that Blanco was less than truthful to the investigator. As a result of Respondent's mishandling and/or misappropriation of funds from the escrow account, the purchaser who entrusted his money to Blanco is out some $2,600.
The Issue The issues in this case are whether S. Dudley Carson, the Respondent (1) failed to comply with a lawful order of the Florida Real Estate Commission; (2) deposited or intermingled personal or operating funds in the broker's trust account; (3) concealed a violation during the course of an investigation; (4) improperly disbursed funds from the broker's trust account; (5) engaged in fraudulent or dishonest dealing in a business transaction; and (6) is guilty of a course of conduct to the extent that he is not trustworthy. If yes, to one or more of the foregoing, what penalty should be imposed.
Findings Of Fact Petitioner is a state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida; in particular, Chapters 455, and 475, Florida Statutes, and Rule Chapter 61J-2, Florida Administrative Code. Respondent, S. Dudley Carson, is now and was at all times material hereto a licensed real estate broker in Florida having been issued license number 3001085 and 3004369 in accordance with Chapter 475, Florida Statutes. On or about April 19, 1994, the Commission entered a Final Order against Respondent whereby Respondent's real estate license was placed on probation for one year. Furthermore, the Final Order required Respondent to complete a 30-hour broker management course within one year of the filing of the Final Order. The Final Order was filed on May 6, 1994, and provided in pertinent part: The licensee shall enroll in and satisfactorily complete a 30-hour broker management course within one (1) year of the filing date of this Order. These course hours are in addition to any other education required to maintain a valid and current license. Failure to complete all conditions of probation may result in a new complaint being filed. This Order shall be effective 30 days from date of filing with the Clerk of the Department of Business and Professional Regulation. (emphasis supplied) In accordance with the provisions of the Final Order, Respondent had until May 6, 1995, in which to satisfactorily complete a 30-hour broker management course. When Respondent read the Final Order, he mistakenly believed that he had one year from the effective date of the Final Order rather than one year from the filing date of the Final Order to complete the required course. Respondent initially registered for a 30-hour management course to be offered in March 1995, but was unable to take the course due to a business conflict. At that time, Respondent did not realize that the next 30-hour course would not be offered until June 1995. In May 1995, Respondent registered for the next available course that was offered in June 1995. After registering for the June course, but prior to taking it, Respondent received a letter from Petitioner requesting that Respondent provide proof of having completed the required 30-hour course. Thereafter, Respondent immediately contacted Petitioner by telephone inquiring to how he could request an extension. Based on information obtained by telephone from Petitioner's staff, by letter dated May 18, 1995, Respondent requested an extension of time to complete the course. On May 23, 1995, Petitioner placed Respondent's request for an extension of time to comply with the educational requirement on the Commission's June 20, 1995, agenda for consideration. Thereafter, Petitioner advised Respondent's attorney, Steven Voigt, that the matter had been tabled and no formal action was taken by the Commission. Respondent completed the 30-hour broker management course on June 30, 1995, and on that same day so advised Petitioner by letter. Respondent had no further contact from Petitioner regarding his request for an extension until eleven months after the request was made and almost ten months after the Commission tabled the matter. That communication was by Administrative Complaint I that Petitioner filed against Respondent on April 21, 1996. As to the Administrative Complaint II, Respondent was licensed at all times material herein as a real estate broker for Crescent Management, Inc., and for RE/MAX on the Key. The broker is the person ultimately responsible for properly maintaining and reconciling all escrow and trust accounts. Further, the broker is charged with knowledge of and compliance with applicable laws and rules relative to trust accounts. Petitioner interprets governing regulations to preclude a broker from keeping retained earnings or commissions in an escrow account, and to remove such earnings or commissions when they accrue, but never less than at least once a month. Moreover, Petitioner interprets certain relevant provisions as prohibiting real estate brokers from maintaining "personal funds" in their escrow or trust account to pay personal or office expenses. Where an escrow or trust account has a deficit, if everyone who had funds in that account made a demand for the same, there would be insufficient funds to satisfy all claims. At all times material hereto, Respondent maintained account number 1622184907 at Barnett Bank in the name of Crescent Management, Inc. (Crescent Management Account). Rental security deposits and owners' funds were kept in the Crescent Management Account. The checks drawn on this account were styled "operating escrow." Stephanie Aucoin was employed by Respondent as an officer manager for Respondent from August 1992 through April or May 1995. While employed as the officer manager and in regard to Crescent Management, Ms. Aucoin's duties included determining which bills and expenses were to be paid and to whom and the amount to be paid. Ms. Aucoin was also responsible for preparing checks via computer and presenting the checks to Respondent for his review and signing. Respondent trusted Stephanie Aucoin and relied upon her to properly prepare the checks. The following checks drawn on the Crescent Management Account between January 1994 and February 1995 are the subject of the instant case: Check No. 5458 dated January 3, 1994, made payable in the amount of $246.40 to Pelican Press; Check No. 5460 dated January 3, 1994, made payable in the amount of $74.67 to Prestige Printing; Check No. 5347 dated January 21, 1994, made payable in the amount of $11,100.91 to RE/MAX on the Key; Check No. 5391 dated February 2, 1994, made payable in the amount of $82.00 to the Division of Real Estate; Check No. 6439 dated July 25, 1994, made payable in the amount of $237.83 to Sarasota Board of Realtors; Check No. 7388 dated December 31, 1994, made payable in the amount of $19,700.11 to RE/MAX on the Key; and Check No. 7005 dated February 16, 1995, made payable in the amount of $4,119.29 to American Express. Respondent signed and authorized five of the seven checks noted in the above paragraph. The checks signed by Respondent were Check Nos. 5458, 5460, 5347, 5391, and 6439. It is undisputed that Check No. 7388 dated December 31, 1994, made payable in the amount of $19,700.11 to RE/MAX on the Key, contained Respondent's forged signature and that Stephanie Aucoin had forged Respondent's signature. Contrary to Ms. Aucoin's testimony, Respondent did not request or authorize Ms. Aucoin to issue the check or sign his name to the check. Respondent had not seen this check prior to Petitioner's Investigator Hayes showing him a copy of the check during the May 1996 audit. The last check in question is Check No. 7005 dated February 16, 1995, made payable in the amount of $4,119.29 to American Express. Although she was not an authorized signatory on the Crescent Management Account, Stephanie Aucoin signed her own name on this check. Respondent never authorized or directed Ms. Aucoin to pay his American Express bill using the Crescent Management Account. Stephanie Aucoin's testimony lacks credibility. After Ms. Aucoin's employment was terminated, she filed a claim for unemployment compensation benefits. The claim was denied by the appeals referee by decision dated August 17, 1995, finding that she "had been signing checks without the owner's permission and had forged the owner's signatures on some of the checks . . . claimant was using company funds to pay her personal bills." On May 16, 1996, Stephanie Aucoin made the following statement in her sworn Petition For Injunction For Protection Against Repeat Violence filed against the Respondent: "Dudley Carson is under investigation for commingling of funds (escrow) and tax fraud . . . the chief investigator (Marie Hayes) had informed me that these charges are of a valid nature and that I could possibly be in danger by Mr. Carson." The statement of Ms. Aucoin is false in that Marie Hayes never made such a statement to Stephanie Aucoin. During the course of Stephanie Aucoin's employment as officer manager for Respondent, Ms. Aucoin and Respondent developed a romantic relationship, beginning in November 1993. The personal relationship was an intermittent one, with Respondent terminating the relationship with Ms. Aucoin three different times, first in late February 1994, next in late November 1994, and finally in early March 1995. Eventually, Respondent believed that Ms. Aucoin had been diverting business funds for her personal use. Based on this belief, Respondent fired Ms. Aucoin on or about April 28, 1995. Soon after he fired Stephanie Aucoin, Respondent employed Chip Harris to review the Crescent Management escrow records and bank statements. The records were in poor order, and it was determined that there was a shortage of escrow funds in the bank account. As soon as practicable, Respondent deposited personal funds into the Crescent Management Account to cover the shortage: $25,000 on July 10, 1995, and $20,063.09 on July 13, 1995. Respondent has made no claim to the $45,063.09 that he deposited into the Crescent Management Account for the benefit and protection of those persons entitled to the trust funds. The proper course of action to be taken by a broker upon discovery a shortage in an escrow account is to replace the missing funds as soon as possible. On July 25, 1995, Petitioner audited Respondent's escrow account's maintained by Respondent for Carson and Associates Ltd., Inc., t/a RE/MAX on the Key and Crescent Management, Inc. Petitioner found that all accounts were in good order and balanced. The two deposits of $25,000 and $20,063.09 had been made into the Crescent Management Account on July 10, 1995, and July 13, 1995, respectively, and prior to the July 25, 1995, audit. Nevertheless, the investigator did not question Respondent about the deposits nor did Respondent volunteer information concerning the deposits. On May 10, 1996, Petitioner completed an audit of the escrow accounts maintained by Respondent for Carson and Associates Ltd., Inc., t/a RE/MAX on the Key and found that all accounts balanced. On May 15, 1996, Petitioner completed an audit of the escrow account maintained by Respondent for Crescent Management, Inc., and found the account to be in good order and balanced. During the time period pertinent to this proceeding, Crescent Management, Inc. earned a 15 percent rental management fee on all rental funds collected. The Crescent Management Account was labeled as an "operating escrow account" and the source of all funds in this account consisted of rent payments by tenants. Of the rents deposited into the account, 15 percent belonged to Respondent as an earned rental management fee and the balance belonged to the owners after deducting payment of the owners' expenses. As each check from the Crescent Management Account was issued, either the "Owners'" account was charged or the "Fee, Property" account was charged. The "Fee, Property" account consisted solely of the funds generated by the 15 percent management fees. Each month, the accounts were reconciled and if there was a shortage or overage of funds, corrective action was taken. The accounting procedure implemented by Respondent and described in paragraph 30 above utilized real estate property management software program, RPM. This program had been recommended to Respondent by one of Petitioner's investigators in 1993. Under this system, one account is set up on computer and all transfers are made internally. Respondent is no longer using this accounting method, but now uses Quick Books, a recognized bookkeeping system, without any apparent problems. In regard to the checks noted in paragraph 16 above, Petitioner alleges that these seven checks were "unauthorized disbursements" in that Respondent used the escrow account to directly pay personal and office overhead and related expenses. However, Petitioner acknowledged that if earned fees in the escrow account were used for third party payments, there is no misappropriation. Furthermore, Petitioner's investigator supervisor testified that where there is no shortage of the escrow funds, the practice implemented by Respondent is just "very poor bookkeeping." In January 1994, the following checks referenced above were issued: Check No. 5458 for $246.40 to Pelican Press, Check No. 5460 for $74.67 to Prestige Printing and Check No. 5347 for $11,108.91 to RE/MAX on the Key. All three of these checks are listed on the January 1994 Trust Account Reconciliation form prepared on February 8, 1994, and signed by Respondent. At the end of January 1994, there was an overage of $1,532.09, representing "Management Fees." The corrective action taken was to remove the $1,532.89 overage and put it in the operating account. Thus, the funds used for payment of these checks were not trust funds, but fees earned by Respondent and to which he was entitled. Check No. 5391 dated February 2, 1994, for $82.00 was payable to the Division of Real Estate for payment of renewal fees. The check cleared the Crescent Management Account on February 18, 1994. The bank statement for February reflects that on February 1, 1994, the account had a beginning balance of $52,109.45, eighteen deposits and credits totaling $95,676.64, and 135 checks and debits totaling $71,799.87. At the end of the statement period, on February 28, 1994, the Crescent Management Account had a balance of $75,986.22. The funds used to pay the $82.00 check when it cleared the bank came from the "Fee, Property" split of the operating account and represented funds generated from the broker's 15 percent rental commission fee. Accordingly, trust funds were not used in regard to payment of this check. Check No. 6439 dated July 25, 1994, for $237.83 and payable to the Sarasota Board of Realtors cleared the Crescent Management Account on August 2, 1994. The bank statement for the period August 1, 1994, through August 31, 1994, reflects that the account had a beginning balance of $45,409.21, 15 deposits totaling $50,287.19; 102 checks and debits totaling $37,184.09; and an ending balance of $58,512.31. The funds used to pay the $237.83 check came from the "Fee, Property" split of the operating account and represented funds generated by the broker's 15 percent rental commission. Trust funds were not used to pay this check. Check No. 7388 dated December 31, 1994, for $19,700.11 payable to RE/MAX on the Key for overhead expenses cleared the Crescent Management Account on January 31, 1995, with funds from the "Fee, Property" split of the operating account with funds generated by the broker's 15 percent rental commission. The bank statement for the period ending January 31, 1995, reflects a beginning balance of $177,991.84; 15 deposits totaling $137,308.35; and 111 checks and debits totaling $116,469.67, resulting in an ending balance of $197,830.52. Trust funds were not used to pay this check. This check appears on the Trust Account Reconciliation form for the month of January 1995, performed on February 9, 1995, and signed by Respondent on that date. According to the Reconciliation Statement, there was a shortage in the trust account of $961.97, resulting from an overpayment to a customer. The amount of the shortage is the difference between the broker's trust liability of $179,159.46 and the adjusted account balance of $178,197.49. The Reconciliation statement further noted under "corrective action taken" that the "customer will reimburse." Check No. 7005 dated February 16, 1995, for $4,119.29, payable to American Express appears on the Trust Reconciliation Statement for the period ending February 28, 1995, performed on March 10, 1995, and signed by Respondent. The Reconciliation Statement shows that the account was in balance with no overages or shortages. The monthly bank statements for the period ending February 28, 1995, reflects a beginning balance of $197,830.52; 13 deposits of $95,753.08; 115 checks and debits totaling $75,951.56, with an ending balance of $217,632.40. The check cleared the Crescent Management Account on February 17, 1995, with funds from the "Fee, Property" split of the operating account with funds generated by the broker's 15 percent rental commission. Trust funds were not used to pay this check. Respondent has been disciplined on two prior occasions. In Case Nos. 92-83432 and 92-84338, Petitioner entered a Final Order on July 20, 1993, which adopted a Stipulation between Respondent and Petitioner. Pursuant to the Stipulation, Respondent neither admitted nor denied the allegations, but was reprimanded, fined $300, and required to take a 30-hour broker management course. The underlying administrative complaint in this matter, based on an August 7, 1992, audit by Petitioner, alleged that (1) Respondent's escrow account was not properly reconciled and had an overage of approximately $661.50; (2) Respondent failed to inform clients that a certain escrow account was an interest bearing account; and (3) Respondent's required office sign was incorrect in that letters were not all at least an inch in height and the words "Lic. Real Estate Broker" were not included. On May 6, 1994, a second Final Order was entered against Respondent in FDBPR Case Nos. 93-84352 and 93-5419. This Final Order required Respondent to pay a fine of $300 and placed Respondent on probation for a year. The administrative complaint which served as the basis for the final order was filed on January 25, 1994, and was based on a September 20, 1993, audit and investigation performed by Petitioner at Respondent's request. The Administrative Complaint alleged that Respondent had failed to properly reconcile his rental escrow accounts for July and August 1993 and had a total escrow shortage of $842.31. The September 20, 1993, audit was performed at the request of Respondent. During May of 1993, the Respondent had concerns as to the proper handling of the rental property management escrow account by his bookkeeper. As a result of these concerns, Respondent contacted Petitioner and requested that Petitioner conduct an audit. In response to Petitioner's request, Petitioner conducted an audit on September 20,1993, which revealed a shortage in the escrow account of $842.31. It was determined that this was due to errors by the bookkeeper. Therefore, the bookkeeper immediately replaced the escrow account funds. The Respondent then terminated the bookkeeper's employment. Nonetheless, the Petitioner filed an eight-count Administrative Complaint on January 20, 1994, against the Respondent charging escrow violations. The Respondent admitted the facts alleged in the January 20, 1994, Administrative Complaint and requested an informal hearing. The Commission heard the matter on April 19, 1994, and a Final Order was filed on May 6, 1994, providing for a reprimand, a $300 fine and completion of a 30-hour broker management course. The Respondent paid the fine and timely completed the course.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order finding that Respondent has violated Section 475.25(1)(e) Florida Statutes, as alleged in the Administrative Complaint filed on April 21, 1996, and imposing an administrative fine of $1,000. RECOMMENDED that all counts of the Administrative Complaint issued September 23, 1996, be dismissed. DONE AND ENTERED this 7th day of October, 1997, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUMCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 7th day of October, 1997. COPIES FURNISHED: Geoffrey T. Kirk, Senior Attorney Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32802 Frederick Wilsen, Esquire Gillis and Wilsen, P.A. 1415 East Robinson Street, Suite B Orlando, Florida 32801 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Henry M. Solares, Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900
